Jun 21, 2010

Comments on Comcast NBCU Joint Venture Due Today at FCC

Today, the first round of comments is due in the FCC’s consideration of the proposed Comcast/GE joint venture relating to NBCU. This is an important step in the FCC’s review of the transaction, and we look forward to the process proceeding in an orderly and timely manner. This initial comment period has been open since March, and we are pleased that the record already contains hundreds of thoughtful comments from a wide range of supporters of the transaction, including community leaders and organizations, elected officials, labor, the independent programmers, leaders in high-tech and advertising, and individuals who know and can vouch for the companies first-hand – reinforcing that this transaction is pro-competitive, pro-consumer, and in the public interest.

This comment process is an important part of the FCC’s thorough regulatory review. Among the substantive comments that have been filed in support of the deal are those of the Governors of California, New York and Pennsylvania and the mayors of Los Angeles, Philadelphia, Las Vegas, Pittsburgh, Orlando and over twenty other cities. Over 46 Members of the US House of Representatives and the US Senate have expressed support; as have over 100 other state and local elected officials. We’re please to have the support of diverse associations representing elected officials including the National Conference of State Legislatures, the National Black Caucus of State Legislators, the National Conference of Hispanic Legislators, the National Hispanic Caucus of State Legislators, the National Conference of Black Mayors, and the National Association of Black County Officials, among others.

Since comments will continue to be filed until the end of the day both online and in writing, we anticipate that additional supporters will weigh in, but already support for Comcast and NBCU has come from every conceivable quarter. From ten chapters of local Urban Leagues across the country to almost forty local Chambers of Commerce, and from the Boston Libraries to the Oakland Parents Literacy Project, the show of support from coast to coast has been tremendous, for which we are grateful.

We’re proud to have the support of so many organizations representing diverse communities including the National Action Network and its founder, Reverend Al Sharpton, the United States Hispanic Chamber of Commerce, the Asian Pacific American Leadership Institute, Asian American Journalists Association and the Latin American Economic Development Association. We’ve received support from organized labor including the local Hollywood Teamster Union and the Southern California regional Teamster Joint Council.

Independent programmers like Tribeca Films, Reelz Networks, Hip Hop on Demand, Outdoor Channel, Crossings TV and others have offered their support, like the NHL. Local broadcasters including public television stations and importantly the NBC local affiliates organization have also expressed their support for the transaction.

Of course, a number of commenters expressed potential concerns, many of which we anticipated and addressed with our proposed public interest commitments. In addition, we will comprehensively address all other concerns raised in our response to today’s filings, which will be filed by July 21. In many cases (e.g., questions raised about the FCC’s program access rules and whether regulation of the Internet is needed), the issues commenters have raised are not specific to the facts of this transaction but are about broader marketplace issues. As we have noted previously, the FCC has made clear that these types of issues should be considered (to the extent they have merit) in general FCC proceedings, and not in the context of the Commission’s review of this transaction.

Comcast, GE, and NBCU stand ready, willing, and able to address legitimate concerns raised by commenters in the process, and we’ve already made an unprecedented number of commitments ranging from our commitment to over-the-air broadcasting in this challenging economic environment to additional channels for independent programmers and additional news, public affairs, and children’s programming. We are pleased to see so many parties commenting favorably on our unprecedented set of upfront commitments.

Some commenters, including certain competitors and programmers, appear to be attempting to use the transaction review process as an opportunity to seek advantages and concessions outside of marketplace negotiations. We believe these efforts should be rejected. For example, there are FCC rules in effect that already ensure that competing programmers’ and distributors’ interests are protected, and we’ve even pledged to extend the program access rules to our retransmission consent negotiations for the NBCU broadcast stations. Several commenters expressed concerns about how the program access rules work. If those rules need to be fixed, the appropriate place to fix them is in general FCC proceedings that apply to all companies, not by putting discriminatory restrictions on the new Comcast/NBCU.

It is important to keep in mind as you read the comments from opponents of this transaction that the businesses in which Comcast operates in today – distribution, programming, online, high-speed Internet, and voice — are all fiercely competitive. Comcast and NBCU don’t compete against each other in most segments of the market, so there is no new concentration. There are no cable systems involved in this deal, so Comcast’s distribution platform will not grow. Comcast is not dominant in any of the businesses it operates in – in multichannel video distribution, we’re less than 25% of the national market; in broadband Internet, we’re about 20% of the national market. Even after combining the programming assets of the two companies, the new entity will only have about a 12% share of total advertising and affiliate revenues, and rank behind Disney/ABC, Time Warner, and Viacom; and will be about the same size as News Corp’s video content assets. As economists and academic experts have already opined, a vertical transaction with these types of market shares simply poses no cognizable risk to competitors or consumers.

One of the myths perpetually promoted by opponents is that this joint venture is of unprecedented size and scope, but this is simply an inaccurate exaggeration. This deal is not even among the top five telecom and media transactions the government has reviewed and approved (e.g., AOL/Time Warner $165 billion; AT&T/Bell South $67 billion; SBC/Ameritech $62 billion; AT&T/MediaOne $58 billion; Bell Atlantic/GTE $53 billion).

Another myth is that this venture is traditional media consolidation. This is another claim that’s unfounded. This transaction is not media consolidation in the traditional sense as considered by the FCC and those concerns are misplaced here. As mentioned above, Comcast and NBCU don’t compete in most segments of the market and there are no cable systems involved in this deal, so Comcast’s video and broadband distribution platform will not grow. The new venture shifts control of NBCU’s programming assets from one Fortune 100 company (GE) to another (Comcast), and there is no appreciable overlap with Comcast’s current content assets. So there is no "consolidation." In fact, this is primarily a "vertical combination," with Comcast taking a stake in additional programming and content assets that can benefit from its complementary distribution assets, and vice versa. Most economists view this kind of vertical combination as spurring competition and innovation, which will benefit consumers. So the combination will drive more competition in the already ultra-competitive content segment.

As comments continue to come in and the process continues, we look forward to working productively and constructively with the FCC and the DOJ, which are concurrently reviewing the deal’s competition aspects. The FCC’s standard of review is the "public interest." From when we announced the deal and our unprecedented public interest commitments on day one to the filing of our Public Interest Statement at the FCC in January, to additional commitments we’ve made to diverse communities, we believe Comcast has demonstrated that this transaction will benefit consumers and the public interest. We look forward to responding and further detailing our public interest case in our July reply.

Tags : Comcast, FCC, GE, NBC Universal


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